Green groups protest against World Bank funding of projects.

  • September 15, 2023
  • Posted by: OptimizeIAS Team
  • Category: DPN Topics
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Green groups protest against World Bank funding of projects.

Subject :IR

Section: International Organisation

In News: Environmental groups have submitted a formal complaint to the World Bank for providing financial support for two coal-fired power plants in Indonesia.

Key Points:

  • Environmental groups have submitted a formal complaint to the World Bank for providing financial support for two coal-fired power plants in Indonesia, violating a pledge to stop backing fossil fuels.
  • The World Bank’s private sector subsidiary, the International Financial Corporation (IFC), is an indirect backer of a coal-fired power complex via an equity investment in one of the project’s financiers, Hana Bank.
IFC – a member of the World Bank Group – is the largest global development institution focused exclusively on the private sector.

The five development institutions under the World Bank Group are:

International Bank for Reconstruction and Development (IBRD)

International Development Association (IDA)

International Finance Corporation (IFC)

Multilateral Guarantee Agency (MIGA)

International Centre for the Settlement of Investment Disputes (ICSID)

The WBG is headquartered in Washington, D.C. The World Bank Group is a specialized agency of the United Nations.

  • The power plant would emit 250 million metric tons of climate-warming carbon dioxide into the atmosphere.
  • The IFC vowed to stop investing in coal in 2020, but it continues to hold stakes in financial institutions with coal investments, like Hana Bank, as long as they have plans to phase out their exposure.
  • Last November, Indonesia became the second country to enter into a Just Energy Transition Partnership that will deliver $20 billion in funds to help reduce its dependence on fossil fuels, but its announcement of investment plans has been delayed.
  • The JETP compels Indonesia to impose a moratorium on new coal-fired power plants, though there are exemptions for “captive” plants that serve other industrial facilities.
Just Energy Transition Partnerships (JET-P)

  • JETP is a financing mechanism. In a Partnership, wealthier nations fund a coal-dependent developing nation to support the country’s own path to phase-out coal and transition towards clean energy while addressing the social consequences.
  • JETP funding can go through grants, loans, or investments.
  • It is emerging as the key mechanism for multilateral financing by developed countries to support an energy transition in developing countries.
  • Particularly relevant with insertion of the phrase ‘phase-down’ of coal in the Glasgow Pact.
  • Recently South Africa, Indonesia, and Vietnam have joined it.
  • India is yet to join the JET-Partnership.
Green groups protest against World Bank funding of projects. IR